Dj Lakeland Financial Corporation, Inst Holders, 3Q 2025 (Lkfn)

What Happened?

A number of stocks jumped in the afternoon session after comments from a key Federal Reserve official boosted hopes for an interest rate cut. New York Federal Reserve President John Williams stated he sees “room for a further adjustment” in the near term, sparking a significant market rally. Following his remarks, the probability of the central bank cutting rates at its December meeting jumped from 39% to over 73%, according to the CME FedWatch tool. This positive sentiment provided relief to markets amid concerns over high valuations, particularly in AI-related stocks.

The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.

Among others, the following stocks were impacted:

• Regional Banks company Pathward Financial jumped 4%. Is now the time to buy Pathward Financial? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Lake City Bank jumped 4.2%. Is now the time to buy Lake City Bank? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company Home Bancshares jumped 4.1%. Is now the time to buy Home Bancshares? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company First Financial Bancorp jumped 4.1%. Is now the time to buy First Financial Bancorp? Access our full analysis report here, it’s free for active Edge members.
• Regional Banks company FB Financial jumped 4.1%. Is now the time to buy FB Financial? Access our full analysis report here, it’s free for active Edge members.

Zooming In On Lake City Bank (LKFN)

Lake City Bank’s shares are not very volatile and have only had 6 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.

The biggest move we wrote about over the last year was 3 months ago when the stock dropped 6.1% on the news that the stock pulled back in an apparent reversal of a rally from the previous session. The decline appears to be a reversal of gains from the previous trading session when the stock jumped 5.3%. That rally was part of a broader surge among regional banks, sparked by dovish comments from Federal Reserve Chair Jerome Powell at the Jackson Hole symposium. Powell's remarks suggested that moderating inflation could lead to potential interest rate cuts, which eased concerns about prolonged high borrowing costs for banks. The pullback suggests that after the initial optimism, investors may be taking profits and reassessing the sector's near-term outlook following the sharp run-up.

Lake City Bank is down 12.5% since the beginning of the year, and at $58.88 per share, it is trading 22.4% below its 52-week high of $75.85 from November 2024. Investors who bought $1,000 worth of Lake City Bank’s shares 5 years ago would now be looking at an investment worth $1,094.

Over the past six months, Lake City Bank’s shares (currently trading at $56.41) have posted a disappointing 7.9% loss, well below the S&P 500’s 13% gain. This was partly due to its softer quarterly results and may have investors wondering how to approach the situation.

Following the drawdown, is now the time to buy LKFN? Find out in our full research report, it’s free for active Edge members.

Why Does Lake City Bank Spark Debate?

Dating back to 1872 and deeply rooted in Indiana's communities, Lakeland Financial Corporation operates Lake City Bank, providing commercial and consumer banking services throughout Northern and Central Indiana.

Two Positive Attributes:

1. EPS Surges Higher Over the Last Two Years

Although long-term earnings trends give us the big picture, we like to analyze EPS over a shorter period to see if we are missing a change in the business.

Lake City Bank’s spectacular 4.1% annual EPS growth over the last two years aligns with its revenue trend. This tells us its incremental sales were profitable.

2. Stellar ROE Showcases Lucrative Growth Opportunities

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Lake City Bank has averaged an ROE of 15.3%, exceptional for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This shows Lake City Bank has a strong competitive moat.

One Reason to be Careful:

Net Interest Income Points to Soft Demand

Markets consistently prioritize net interest income over non-recurring fees, recognizing its superior quality compared to the more unpredictable revenue streams.

Lake City Bank’s net interest income has grown at a 6.5% annualized rate over the last five years, slightly worse than the broader banking industry. Its growth was driven by an increase in its net interest margin, which represents how much a bank earns in relation to its outstanding loans, as its loan book shrank throughout that period.

Final Judgment

Lake City Bank’s positive characteristics outweigh the negatives. After the recent drawdown, the stock trades at 1.9× forward P/B (or $56.41 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free for active Edge members .